Tenants in Common implications for CGT on property sale

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    Tenants in Common implications for CGT on property sale

    hi guys, can anyone answer this query about tenants in common implications for CGT on a property sale?

    I bought a property in Dec 2010 in my own name and moved in with my partner who I later married in 2013. In Nov 2016 we bought and moved a new home in joint ownership but decided to keep the old property as a rental. At this time I changed the ownership of the property to be in joint ownership as “tenants in common” giving my wife a 99% share so that she could pay the tax on the rental income as a lower rate tax payer. I also submitted the “beneficial interests in joint property” form 17 stating my wifes 99% share.

    We are now looking to sell the property to complete in Sept of this year for £90K more than it was purchased for. I believe the CGT gain is reduced by the proportion of time lived there plus 18 months. I/we will have owned the property for 106 months, and lived there for 72 so the relief should be (72+18)/106 = 84.9% giving a gain of £13.6K which is slightly over the threshold.

    Prior to changing the ownership of the property I spoke to someone at HMRC who advised me that if I changed the ownership this gain could be split evenly between me and my wife because she had lived there for the same amount of time even though I had sole ownership at the time we moved in, is this correct and does the fact that she currently has a 99% interest have any implications for the CGT on the sale?

    thanks!

    #2
    ok I posted this on the mse forum also so see answers on there - no tax to pay apparently

    Comment


      #3
      If your sale completion date is delayed for any reason ( e.g buyer stuck in a chain ) until after 6 april next year , the ppr period is reduced by 9 months ( from 18 months ) . and your taxable capital gain may become £20K ( shared wife 99% = £19.8K and you 1% = £200).

      The tax free capital gains allowance is £12K so wife may have to pay tax at 18% or 28% on £7800 and you pay no tax on £200 gain..

      If you and wife change to 50:50 split, then taxable gain becomes £10K each and this is covered by the capital gains allowance.

      But don't rely on this to be correct. Check with a tax professional .

      Comment

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